Bajaj Finance Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Bajaj Finance Ltd (BAJFINANCE) Q3 FY23 Earnings Concall

Management Update:

• [00:09:52] BAJFINANCE said it added 1,300 employees between 2Q and 3Q across the three companies. 3Q23 also witnessed highest ever loan book and new customer additions.

Q&A Highlights:

• [00:29:46] Piran Engineer of CLSA enquired about the company looking to hire 3,000 to 4,000 engineers, if it’s for Bajaj Finance or Finserv. Rajeev Jain MD answered that for the current year, BAJFINANCE hired 650 engineers from colleges in BFL. So next year, the company foresees to add about 1,000 people next year.

• [00:33:04] Piran Engineer of CLSA asked if the company can sell DBS credit card to an RBL customer and vice versa. Sandeep Jain CFO answered that as a governance rule it cannot be cross sold. However, if the customer has closed the card on either side, after a cooling period it can be sold.

• [00:37:50] Abhishek Murarka of HSBC enquired why as a long term plan, conversion of the company into a bank is not part of it. Rajeev Jain MD answered that there is no plan to convert into a bank and BAJFINANCE’s current performance does not give any reason to become one.

• [00:39:28] Abhishek Murarka of HSBC queried about decline in fees and commission expenses despite strong growth in new loans booked, customer acquisition, and sequential AUM. . Sandeep Jain CFO it’s IndAS based accounting. So the origination cost doesn’t fit in opex, it gets amortized along with income.

• [00:44:58] Harshvardhan Agrawal of IDFC asked what percentage of the book will be PSL compliant. Rajeev Jain MD answered that the company doesn’t track it. And if it was tracked it will be anywhere between 14-16% on a consolidated basis.

• [00:45:46] Harshvardhan Agrawal of IDFC enquired about the right to win in the MFI business and tractor financing. Rajeev Jain MD replied that MFI has a deep knowledge of the geography and existing customers and is looking to launch in 2 states with plans to expand to 10 over four years. They also have experience with personal loan products, as new RBI regulations require that certain loans be tagged as MFI.

• [00:49:08] Kuntal Shah of Oakland Capital asked about credit card approval by RBI for the company and NBFCs. Rajeev Jain MD answered that it has applied and is hopeful of getting the approval.

• [00:49:28] Kuntal Shah of Oakland Capital also asked if the company is slowing down on geographical reach considering only 27 locations were added in 3Q.  Rajeev Jain MD said that in terms of geography the economics must work. The company foresees that in next 5 years, it will open only about 445 locations, of which 400 will come in UP, Bihar, and Northeast and rest in other places.

• [00:53:08] Nischint Chawathe from Kotak enquired how the company is changing the business model to be successful in the prime segments and mass affluent class of the market. Rajeev Jain MD said that as the company grows larger, so business needs to be paradise out. The company believes it can bring greater and deeper technology intervention from a last mile standpoint to the business.